To date, the US Department of Justice Antitrust Division (DOJ) has obtained six corporate guilty pleas, three individual indictments and one individual guilty plea in its long-running investigation into price fixing of capacitors by primarily Japanese manufacturers. Capacitors are small electronic components that are found in nearly every device that is plugged in or powered by a battery.
- In a May 24 sentencing hearing, the DOJ took sharp criticism from Judge James Donato (NDCA) for what he called a “sweetheart deal” by DOJ in its plea agreement with Matsuo Electric Co. The plea called for payment of a $4.17 million fine to be paid over five years.
- The deal, reached at the same time as an individual plea of Matsuo’s former sales manager Satoshi Okubo, was one that DOJ had touted, arguing that “[t]he simultaneous acceptance of responsibility by a company and the executive who supervised its involvement in the cartel demonstrates in a concrete way their future commitment to lawful conduct and an improved business culture.”
- Judge Donato saw it another way, arguing that he “didn’t like the idea of corporations holding individuals out to dry in return for leniency.” This comment came in reference to the assertion that Okubo had been asked to serve a one-year prison term so the company would get a lesser sentence.
- The court did not throw out Matsuo’s sentence altogether, but requested further details about the company’s financial resources so that it could decide whether to accept the corporate plea agreement, in particular the extended payment term. Okubo was sentenced in February.
- In previous sentencings, Judge Donato had imposed terms of probation on the corporations exceeding those requested by DOJ.
WHAT THIS MEANS
Despite the challenging optics of the Matsuo / Okubo case, the DOJ will likely stay the course in its pursuit of individuals for antitrust violations, including requiring jail time from overseas executives and in demanding full cooperation from companies against their own executives.
- Makan Delrahim, the incoming assistant attorney general for Antitrust (pending confirmation), made his views about individual responsibility known in 2004 during his earlier tour with the Antitrust Division, when he advocated to the international antitrust community that “[b]ased on our experience [in the United States], we believe that there is no greater deterrent to the commission of cartel activity than the risk of imprisonment for corporate officials. Few corporate executives regard spending several months or years in a federal prison as a ‘cost of doing business’ that they will readily absorb.”
- In fall 2016 the Department as a whole undertook a policy review that directed prosecutors to insist on individual accountability for corporate crime, leading to the issuance of the Yates Memorandum. That memo requires DOJ prosecutors to evaluate individuals for prosecution beginning at an early stage, and makes clear that corporations will not receive cooperation credit if they withhold cooperation regarding their executives.
- Attorney General Jeff Sessions, in his first speech on white-collar crime, reaffirmed the continuing need to hold individuals accountable for corporate crimes, suggesting that the Department would not walk away from the principles outlined in the Yates Memo.
- At the staff level, current Division leadership has touted the fact that the Division now prosecutes three times as many individuals as corporations, a multiple that has risen from two in recent years.
Conclusion: Corporations, in particular overseas firms with exports to the United States, should maintain their anti-cartel compliance policies with vigilance and ensure that executives have the training they need to avoid cartel violations. Those firms should have a contingency plan in place for the event they are touched by an investigation. Such a contingency plan should include a well thought-through strategy for preserving records and devices, and for interviewing employees who have knowledge of the events. These steps will ensure the company is in a position to cooperate if it chooses to down the road.